Raising Capital for Your Business Renton WA

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Raising Capital for Your Business

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Important Considerations in the Early Stages of Business Life By Chris E. Talis

When starting a business in this most challenging environment, it is important that you use your resources as efficiently as possible. This will allow you to get through the difficult early stages of business life. It is best to try to do as much as you can on your own to raise capital, but also be wise with respect to seeking direction when it counts most.

The following are important considerations for businesses trying to raise capital in the early stages of business life: Be creative in finding capital to fund your business. It is important for you as a business owner to be creative when it comes to raising capital in this tightening financial environment. Is it equity capital you truly need or is debt financing available to you potentially? Can the resources of family and friends be sought? Can you use credit cards for short term needs? All these options must be considered in order to preserve valuable equity. Can government programs help? It is important to investigate Small Business Administration and Economic Development Authority offerings. Maintaining a good credit is also vital, not only for you as a principal personally but at the business level as well. Does the business have assets that can be used as collateral (examples: accounts receivable, real estate, tangible assets, etc.)? Can you borrow using personal assets as collateral? All avenues of potential capital must be investigated in order to retain equity during times when equity is most vulnerable...during a period of economic slowdown.

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Meet with a banker/investment banker. Seek what programs are available for small businesses. Open appropriate bank accounts (bring formation papers, your tax ID#, and photo ID). Ask what you should do for now to establish credit for your business even if they will only offer your company a small credit card line. Your business’s credit, though different than your own, does depend upon your personal credit as well. This is the first step in establishing a credit history for your company for future borrowing.

Consider the use of a venture capitalist. Venture capitalists (VCs) tend to invest in an industry that they have had experience in. Typically, they have had success in their industry at one time or another and their company was either strategically sold, or went public. This experience has given them tremendous insight and is something they will look to leverage when investing in an opportunity. Get an understanding of the VCs recent investments and ask to speak to the management of those companies. When you have identified potential venture capital firms, request the details of recent transactions they have been involved in. Ask to speak to principals in the firms they have invested in. See how the experience is evolving and if the principals are pleased with how the relationship is proceeding. Inquire about issues that may have ari...

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